COMMENTARY–ProspectingJournal.com–Sitting in abundance under untapped deposits in North America, graphite is a material popularly unheard of. But amongst scientists and those who have studied it, it is dubbed ‘the miracle material’ and for good reason. In graphite we have a material hundreds of times stronger than steel and tougher than diamonds. It conducts heat and electricity far more effectively than copper and it boasts a surprising degree of flexibility. And in recent times, it has been rapidly catching the attention of investors across the globe. But what is all the hype about?

Graphite bears a strong resemblance to plastic in that it functions in a plethora of roles and is prominent in a number of industries. More importantly, every industry is set to demand even more of it. Take China for instance. Having recently struck a deal to import uranium from Canada, China hopes to have 30 new nuclear reactors up and running by 2020. Each reactor will rely on graphite for startup, roughly 3000 tonnes of the stuff (plus 1000 tonnes each for every year that follows). Lets do the math: In a not so distant five-year period China may require up to 250,000 tonnes of graphite just to manage such an endeavor. Considering the fact that only 1 million tonnes of graphite is currently produced each year, we are looking at vast increases in graphite production.

Impressively, we haven’t yet considered other industries. Have you ever heard of lithium-ion batteries? They power the electronic devices that have gripped society in the 21st century. Surprisingly, every battery requires more graphite than it does lithium and with the current rate of demand for these batteries doubling every 3 to 4 years the outlook looks far from grim. And what about touch screens? At the moment the industry is heavily reliant on using a less efficient material that is set to go extinct within the next 5 to 10 years, leaving Graphite as the next best option. Samsung leads the revolution, having already succeeded in using the material to produce a 25-inch flexible touch screen. And it doesn’t end there. With graphite primed to be further incorporated in green and solar energy production it comes as no surprise that stocks have risen steadily throughout 2012.

So why haven’t we heard about graphite until now? Ryan Fletcher, CEO of Zimtu Capital, argues that prices of materials have been low throughout the past decade, providing limited reason to divert from the copper and steel norm. There has been little “incentive to explore or fund or develop new graphite projects,” until now.

And as if by chance, the miracle material happens to sit right underneath our noses here at home. Strike Graphite [SRK - TSX.V], previously known as Strike Gold, is one of the first companies to realize the vast reserves of wealth sitting under Canadian soil. Corporate Development Manager Damien Lowry writes, “we’re getting aggressive with exploration…I don’t think many people realize how many mines have to come on board to satisfy the demand for large-flake graphite.” In doing so Strike Graphite has stepped leaps and bounds ahead of the chasing pack and is looking to profit enormously in the near future. According to Lowry, they are “trading about half a million shares a day” and there is no ceiling in sight.

And as it becomes increasingly evident that we are engrossed in a technological golden age, Graphite is poised for the very, very top. Little wonder then, that the United States and the European Union have listed it as a ‘critical material’.

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Jason Staeck
ProspectingJournal.com

Source: http://www.prospectingjournal.com/210212/